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Market faces up to troubled calm after a perfect storm

Convertibles bankers are fretting about the lack of issuance so far this year. It’s hardly surprising, it was one of the most active markets in 2001. Some are hoping that the need to raise money quickly will help boost volumes but issuers may prove cautious.

Matthias Mosler

Just as equity-linked bankers are starting to get used to a high profile, it seems it may be in jeopardy. Last year, as convertible issuance shot up by more than 50%, their market suddenly became mainstream. From being a product that contributed between 10% and 15% of the business of the equity capital markets divisions of most banks, in 2001 it accounted for more than a third. But a quieter than expected start to 2002 is giving market participants the jitters.

They're right to be nervous. Since the beginning of the year, investors have had a very rough ride. January and February have been painful months, with equity valuations down and bond spreads widening on the back of a steady flood of negative news.

All of this means that they're demanding proper payment in return for the risks taken on.

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